Industry Spotlights - Formwork & Scaffoldings

Investments in Construction Projects

Hold up the Scaffolding Market

November 2017

Industry Spotlights - Formwork & Scaffoldings

Investments in Construction Projects

Hold up the Scaffolding Market

November 2017
The global construction scaffolding rental market is expected to grow at a CAGR of 5.32% during the period 2017-2021, according to Research and Markets. A booming construction industry is one of the significant factors driving the growth of the construction scaffolding rental market. Simultaneously, the construction ventures in developing countries are expected to keep growing at a much quicker rate than advanced economies. It is anticipated that the developing economies will contribute to 56% of the world's construction market share.

Various APAC (Asia Pacific Countries) countries have announced large projects that are expected to be worth almost USD240 billion, for instance, the high-speed rail project in Japan and Trans-Sumatra Toll Road. Moreover, the construction business in the Middle East and Africa are anticipated to develop quickly over the next four years, which will also contribute to this market's growth until the end of 2021. In terms of geography, the Americas led the construction scaffolding rental market during 2016 and will continue to dominate the market in the future. The major markets in the Americas include the US, followed by Canada and the Latin American countries. The US had the highest rental penetration in the region due to the stringent safety laws and credit crunch in the country. With expected investments of around USD300 billion to improve road infrastructure in the US, the market is expected to receive a major boost in 2017. The overall market in the Americas is expected to grow steadily with rapid growth in selected areas such as Mexico and Brazil. The market growth is expected to follow the pace of public-private partnership (PPP) in infrastructure development, according to Technavio. During 2016, the supported scaffolding segment was the highest revenue contributing product segment in the construction scaffolding rental market and will continue to lead the market in the coming years. Supported scaffolding is employed for situations that require elevation and is also the most commonly used type of scaffolding material. This type of scaffolding is the safest and the most cost-effective type, leading to its augmented adoption in the market. In terms of revenue, the residential segment led the construction scaffolding rental market and will continue to dominate the market over the next four years. The residential segment includes scaffolding requirement during the construction activity of residential buildings. It has now become the largest segment in the market due to the recent boom following the financial crisis. Although APAC holds the largest market in the residential segment, the market is expected to slow down due to less adoption of scaffolding systems in the coming years. As a matter of fact, the latest trend gaining momentum in the market is developing new services completing rental offer. Traditionally rental companies used to rent out scaffolding equipment and provide manpower for erection and dismantling of the framework. Since there are very low barriers to entry, construction companies are looking for one-stop solution for all their equipment requirements. This has led to the consolidation in the industry for large rental companies by either acquiring small companies or forming alliances to expand their product offerings as well as increase their geographical presence. In fact, one of the major drivers for this market is intensifying safety regulations. The Occupational Safety and Health Administration (OSHA) estimates that roughly USD2.3 million construction laborers work on scaffolding platforms. Furthermore, one of the major factors hindering the growth of this market is inefficient management. Rental organizations encountering remarkable development need to scale assets productively to take care of varying market demand and overseeing changes in income profile to enhance usage of the accessible hardware. They additionally need to keep up regular general maintenance and services to amplify re-sale price of the equipment toward the end of the rental life. Without the capacity to forecast and deal with these progressions ideally, rental organizations wind up losing profits as they neglect to meet their planned lowest cost per transaction threshold.